The Russian stock market collapsed on Monday, and after the United States imposed the most stringent sanctions against Russia, aluminum prices soared.
The Russian RTS Index plunged 11.4%, the largest single-day decline since Dec. 16, 2014, down 12.4%. Meanwhile, VanEck Vectors Russia Exchange Traded Fund (RSX) fell 10.7%.
On Monday, the United States approved a few Russian oligarchs, officials, businesses and institutions on Friday after a sharp drop. The United States has also frozen the assets of these entities under the jurisdiction of the United States. Sanctions prohibit U.S. citizens or entities from doing business with sanctioned Russian entities. “Furthermore, the U.S. Treasury Department said on Friday that non-Americans may face sanctions for blatantly conducting major deals for individuals or entities that are blocked today.”
One of the sanctioned individuals is the oligarch Oleg Deripaska, a billionaire who runs the Russian aluminum company Rusal and has also been sanctioned. Deripaska was also charged by Special Legal Adviser Robert Mueller about Russia’s participation in the 2016 US presidential election investigation.
“The new U.S. sanctions against Russia are a negative reason to change the rules of the game for three reasons: they directly affect investment in securities; they are decoupled from explicit conditions; they will be used for “outside”,” said Christopher Granville, the manager. Say. TS Lombard’s director is in a note to the customer. Sanctions “prove that the risk premium for Russian asset valuations is high.”
Sanctions against the Russian aluminum industry led to a rise in aluminum prices on Monday, because they may eliminate most of the global supply. The benchmark aluminum price on the London Metal Exchange reached the highest level in more than a month, before the transaction price rose by nearly 4% to 2,122.50 US dollars per ton. Since the announcement of the sanctions on Friday, it has risen by about 7%.
The sanctions have frozen all assets under Russia’s jurisdiction. Rusal is one of the largest aluminum producers in the world.
After President Donald Trump imposed a 10% fine on aluminum imports, the price of aluminum rose and the US sanctions against Russia came more than a month. Major trade allies Canada and Mexico and the European Union are exempted from tariffs, but Russia is not.
“This is even more serious for Russia’s export of aluminium to the United States,” Carsten Menke, an analyst at Swiss Baussen, told Reuters. “It’s not yet clear how this may affect other countries that use Russian aluminum.”